National Republican., 1887-08-09
To tho President.

The act under which the Secretary OF the
Treasury proposes to buy bonds was passed
in 1869, and declared as It's first substantive
proposition that the faith OF the United
States is solemnly pledged to the payment
in coin. or its equivalent Of all the obliga-
tons of the United States, except where
the law authorizing their sue provll led
that they might be paid In lawful money.
This law, based on this proposition, as
declared in its title, was made to strengthen
the public credit The obligations OF the
government were at that time worth on the
market only about eighty cents on the dol
lar. Two declarations by the government
seemed necessary to give these obligations
an impetus toward par First, that they
should be paid In coin or its equivalent (the
demand being then very strong in some
quarters that they should be paid in green
backs), and second, that the public debt
should be yearly reduced By means OF q
sinking fund. The law In question to ac-
conpl!sh the appreciation OF the bonds to
par In coin provided for both. The h|
making this pledge declares that the coin
psid for duties on imported goods oh I'll
be set apart as special fund, aai
shall be applied, first, to paymen. Of
interest on the bonds and notes OF the
United States; aud, second, to the purchase
orpayment Of per centum OF the entire
debt of the United States, to be made within
each fiscal year. 1t was expressed, as q
hope, by members OF tho Senate, when the
law passed later providing for bonds Of
lower rate OF interest was enacted, that
within thirty years all government obliGa-
tions would be NJ par In coin. The thought
OF The nation at that time, as expressed In
It's pledge, was to reach the maximum o.
good credit, par in coin. The degree OF
strength sought to be given to government
credit by this pledge was to bring the evil
dences Of the government debt up to par 10
coin. This law was not intended to In
crease the face value or amount of the gov
eminent debt, as expressed on the face OF
its outstanding obligations, nor to give au-
thority to do so under any circumstances.
The public debt was fixed and deterninod
by the law, and the face OF the bonds and
notes outstanding.
This debt has definite character on the
governments books. The supreme object
go defined and expressed. The intent aud
purpose of the law govern its interpreta-
tion. This act was dealing with languish-
Dg public credit. The intent and purpose
was to raise the obligations of the govern
mont from the dependency then covering
them to an equivalent value to their face
In coin. When this was done the full force
end strength Of the law was spent. The
Secretary treats this law as authority to
him to add, by agreement with the boud-
holder, one, two, three, four, or five hun
dred or more dollars In premiums to each
one. Thousand dollar bond, comprising the
per centum Of the entire debt which he
is yearly required to purchase or pay under
the sinking fund law.
The bonds run thirty years; per centnm
lie to be purchased or paid each year. Thus,
II the Secretary is right, when the law wac
enacted 80 per centum Of the entire debt
was subject to such increase. II this bs the
correct construction of the Law then 30 per
cent Of the debt is no longer fixed aud GER
tain, as expressed on the government books,
but 1t is the face Vslue OF such 30 per
centum In coin plus the amount to be added
thereto by agreement between tho Secretary
and the bondholders each year. Tue law
which sets aside coin to pay the principal
and interest of the bonds II this theory be
true, also ought TO have provided that SUI
flcient coin should be set aside to pay the
amount added to the face of the bonds by
agreement, as above stated.
There is no express authority in the law
20 pay premiums on bonds; nor Ia thero any
provision In the law TO provide coin for the
payment or purchase of more than the face
value Of the bonds. The assumption that
authority exists to pay more is built upon
construction alone. A law whose control
ling and avowed object Is to ert'nguih a
debt cannot rightfully bo construed as au,
thOrity TO increase the debt,
When the bonds were below par, as they
at one time were, and were expected to
remain for long time, It would have
worked injustice to the great hulk of the
bondholders to pay the face value Of per
.ertum Of the entire debt, with the privl-
ltge Of the Secretary to select the holders
Gf that per centum, For THIS reason the
law gave power to purchase or pay, as
Ipmipg that the Secretary would do the one